First Home Saver Account
Need help saving for your first home loan? First Home Saver Accounts (FHSAs) are a new government initiative to help Australians save for their first home through a combination of Government contributions and low taxes.
Who qualifies for a First Home Saver Account?
An individual can open a First Home Saver Account if they:
- are aged 18 or over and under 65;
- have not previously purchased or built a first home in which to live;
- do not have, or have not previously had, a First Home Saver Account; and
- provide their tax file number to the provider.
How does First Home Saver Account work?
Contributions are made by individuals from after-tax income to their First Home Saver Account. The Government will then contribute 17 per cent on the first $5,000 (indexed) of individual contributions made each year. This means that if you contribute $5,000, you will receive a Government contribution of $850 to the account. However, interest earned on the account will be taxed at 15%. There is also a limit of $75,000 on the overall account balance where government contributions cease.
There are some restrictions on the use of the fund:
- To withdraw the funds, minimum contributions of $1,000 need to be made over the course of at least four separate financial years;
- You can only withdraw the funds tax free if they are used to buy or build a first home in which to live. The full amount will need to be withdrawn and the account closed;
- Alternately, you can close your account and contribute the full amount to superannuation at any time without penalty.
What's more, Treasurer Wayne Swan has announced an introduction of greater flexibility in the scheme!
Changes announced in the budget propose that a first home buyer can purchase a property any time while holding the First Home Saver Account. If it happens to be before a minimum four years, the account will remain open till the end of the qualifying period.
During the four year qualifying period, funds you will not be able to remove the funds however once the period ends, savings will be released into paying off an approved home loan.
More information?
For more information on the First Home Saver Account, you can visit the government website by Clicking Here
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